In a hot market, there are times when you probably should not sell. Recently, I did a listing presentation for a couple who owns a lovely two bedroom TIC unit near the Alamo Square area. For those who are not familiar with the term, TIC, it is a property that is held as Tenants In Common with other individuals. It is a form of group ownership. “In a TIC, the entire property is owned by the TIC group (the tenants in common) in percentage shares, and a detailed written agreement describes each TIC member’s rights and duties, including exclusive rights to use and occupy particular dwelling units, along with assigned parking, storage and deck areas.” See Tenancy In Common in San Francisco by Gellman & McSparran at http://www.g3mh.com/category/articles/
They are currently in the process of converting their unit to a condo, which may not be finished until the fall. Since it is a “hot market,” they were wondering if they should list it now instead of waiting until it becomes converted to a condominium. Naturally, I prepared a Comparative Market Analysis for sales of two bedroom TICs in their area and two bedroom condos so we could compare. They are certainly in a much better position than a TIC that is not converting, however if they put it on the market now it will be entered into the Multiple Listing Service as a TIC and not as a condo. This will limit the number of interested buyers. All of those condo buyers that might be interested in their unit will not see it in their search results if these prospective buyers have only included condos in their search criteria.
While I knew there would be a disparity between the average sales price of a TIC vs. a condo in the last year in this neighborhood, I was surprised to see how large that disparity was. (By the way, since there were so few sales, I searched for the last year, not just the last six months). The average sales price of a two bedroom TIC in Alamo Square neighborhood was $670,000; the average sales price of a two bedroom condo in Alamo Square was $996,308 – a difference of $326,308! Should they sell now or wait? While there is no guarantee that the market will stay “hot,” this is a big difference and they might as well fully reap the benefits of condo conversion and wait. They could sell it “off market” and advertise it as “almost converted” but selling it “off market” and not exposing it to the full marketplace is unlikely to get them their best price. (But that’s another blog post for another day).